To be named Zhejiang MYbank, the bank will be established in Hangzhou of the eastern province of Zhejiang.
Alibaba, through its subsidiary Zhejiang Ant Small and Micro Financial Services Group, will hold a 30% share in the bank.
Other major shareholders would be Shanghai Fosun Industrial Technology Development with a 25% stake; a subsidiary of Wanxiang Group with 18% and Ningbo Jinrun Asset Management with 16%.
The Chinese regulator requires the companies to establish their banks within six months and apply to start operations.
In addition to Alibaba, two other firms including JuneYao Group and Shanghai Metersbonwe Fashion and Accessories have got approval from CBRC to jointly set up a bank in Shanghai.
The approval follows the announcement made by the government in March to reform the banking sector, which is dominated by four state-owned banks. China previously had only two private banks, Minsheng and Ping An.
In late July, the CBRC approved the establishment of three private banks including Webank, funded by Chinese Internet giant Tencent.
Image: Alibaba Group headquarters in Hangzhou, China. Photo: courtesy of Thomas LOMBARD.
